Eye on Employment: June 2018 Edition

The Eye on Employment is NWPB’s monthly breakdown of the latest data from Statistics Canada’s Labour Force Survey. In this document, we will provide you with a summary of changes in local labour market indicators, provide comparisons to historical benchmarks, and show how seasonality affects employment in Niagara.

First, a foreword on our source: Statistics Canada’s Labour Force Survey or LFS. The LFS is a robust tool that provides us with a considerable amount of data. At its core, however, it exists to sort Canadians into one of three groups: people who are employed, people who are not employed but looking for work, and people who are not in the labour force. This is a people-focused survey, and the important thing to remember is that a count of people is not a count of jobs. People might do a job, either for an employer or through self-employment, but the LFS is counting the people, not the job. Bearing this in mind, let’s turn our eye toward employment.

Monthly and Yearly Overview

Month-over-month we can see 4,400 more people either working or looking for work. There were 2,800 more people working full-time between April 2018 and May 2018, and 1,100 more people working part-time. This increase in full-time employment more than compensates for the decline observed in April of 2018. May’s full-time employment is now 96.9% of the average full-time employment in 2017. Compared to this time last year, we can observe 5,800 more people employed. However, our relative employment strength this year is generally owing to 6,900 more people engaged in part-time employment compared to May of 2017.

Niagara’s unemployment rate in May increased to 6.9% from 6.7% in April. Yet Niagara also reported larger increases in the participation and employment rate. Labour market participation increased from 60.2% to 61.3%, and the employment rate increased from 56.2% to 57.2%. In consideration of these data, and a month-over-month trend that saw 3,800 more Niagara residents employed, it is much more likely that our slight increase in the unemployment rate is owing to a general trend where more people are working and more people are looking for work.

In a perfect world, we want to see falling unemployment rates paired with increases in the employment and participation rate, as that would mean more people are working while fewer people are looking for work. This increase in the unemployment rate paired with growth in the participation and employment rates is generally indicative of an increase in people who are actively looking for work.

It’s also important to keep in mind that the data in Table 1 are seasonally unadjusted figures. That means factors like holidays, expected employment slowdowns due to weather, and other factors that can be reasonably be predicted to influence employment are not accounted for in these data. Table 2 shows what the labour force looks like when we adjust for seasonality.

Here, the month-over-month comparisons show 2,300 more people employed in Niagara between April and May, 2018. The unemployment rate increased by 0.5%, and the employment rate increased by 0.3%. With the adjusted data showing an employment gain of 2,300 and the unadjusted data reflecting 3,800 more people working, one might be tempted to ask which of these data is correct.

The answer is that both are equally valid. Both measures are essential tools to understanding labour force trends in Niagara. In this case the difference between the two figures is a strong indication that seasonal and predictable factors in the economy are having an impact on employment growth. The important note here is that even when we control for those factors (i.e. use seasonally adjusted figures) we are still seeing increases in employment.

The Youth Lens

LFS data also allows us a snapshot of youth (defined as people age 15 to 24) employment in Niagara. Once again these data do not account for seasonality.

Here we see 2,600 more youth working in May compared to April. There were 2,100 more youth working in a full-time capacity, and 500 more youth working in a part-time capacity.

The youth unemployment rate increased from 13.1% to 13.9%. As was the case with the general labour market, youth participation and employment rates increased by a larger margin than the unemployment rate. The youth employment rate increased from 57.0% to 61.0%. The participation rate increased from 65.5% to 70.8%.

Here’s where these data get interesting. The changes above allude to what is called an absolute change: that is to say the difference between the new figure and the old figure. For example, the absolute change in employment was 4% (i.e. 61% - 57%). Comparing the absolute changes in this case isn’t a fair comparison because the employment rate is less likely to show large absolute changes than the employment and participation rate. Consider that a 4% increase or decrease in the unemployment rate means a much more dramatic shift in the labour market has occurred compared to a 4% shift in the employment rate.

A fairer demonstration that the employment rate’s increase is outpacing the unemployment rate requires we look at proportional change (pay attention, there will be a test). Therein, the employment rate saw a month-over-month change of 7.0% and the unemployment rate changed by 6.1%. There are two very important lessons to take from these data:

1) A month-over-month change is not an increase in the rate. It would be very incorrect to say the youth unemployment increased by 6.1%. It had a proportional change of 6.1% and an absolute increase of 0.8%. Both are true statements, but the devil is in the details.

2) The increases in the month-over-month changes favouring employment rate are another indicator that May saw more Niagara youth working and more Niagara youth looking for work. Given an increase of 3,300 youth into the labour force, these figures are quite expected.

Would you like to know more? NWPB is ready for your questions. Reach out to Adam Durrant, NWPB’s Operations and Research Manager (adam@niagaraworkforceboard).